Few years ago, a CSR report released by an oil company sounded like an oxymoron. Even later on when these reports became more common, it still looked to many people like a greenwashing attempt. After all, can a company really show it cares about the environment and stakeholders when its core business is oil production? I was hoping Chevron’s 2011 CSR report would prove this assumption to be wrong and that the “bad guys are trying to be better.” Is it too much to ask in 2012?
Apparently yes, although to be honest, there is no simple answer of yes or no to this question. While it does look like Chevron is making some progress, these are mostly baby steps, and when you’re one of the largest oil companies in the world, baby steps might not be enough.
The problem starts with the general tone of the report which is positive to an almost ridiculous degree. Now, to be fair, almost every CSR report is very positive, but a growing number of companies understand that reports that only include good news are not trustworthy and therefore try to maintain some balance (see Unilever and Timberland, for example). Yet, in this case it seems like Chevron didn’t manage to create a balance, providing almost only good news. Don’t get me wrong – Chevron has numerous achievements to be proud of, like reduced flaring and venting in operations by 33 percent since 2003 or continuing its strong workforce safety performance in 2011. But in too many parts of the report, the positive information is either presented in a biased way or is missing some important parts.
Take for example one of the report’s highlights – investments of over $200 million “to support community programs around the world, with a focus on health, education and economic development.” It sounds very impressive and this money supports very important programs like a global action plan to eliminate mother-to-child transmission of HIV or the education of thousands of children and adults in developing countries. However Chevron doesn’t mention that its profits for 2011 were $26.9 billion – in other words, those investments represent less than 1 percent of Chevron’s profits. Now it looks a little bit less impressive, right?
Another example is the fact that Chevron highlights its commitment to respecting global human rights. The company writes that it “began global implementation of its Human Rights Policy to foster greater awareness of human rights issues throughout the company and enhance capabilities to manage them. The Human Rights Campaign Corporate Equality Index gave Chevron a 100 percent rating for the seventh consecutive year.” This is a very important issue, especially in the energy sector, and therefore it is disappointing to see that Chevron talks only about its achievements, yet doesn’t disclose its battle against the ruling against the company for dumping billions of gallons of toxic oil waste in the Ecuadorian Amazon. This is an important human rights case and the fact that it is not mentioned even once in the report makes Chevron’s human rights achievements somewhat less credible.
The absence of any mention to the company’s legal battle against the ruling also damages the credibility of the report in terms of stakeholder engagement. First, it indicates that Chevron is not fully transparent and shares only information it feels comfortable with. Second, it brings up questions about the company’s real commitment to stakeholders. Can we really believe a statement like “human rights wherever we operate is grounded in The Chevron Way, which describes our vision and values,” when the company doesn’t disclose its position on the most important human rights issue it deals with right now?
One more issue is the significance Chevron gives to its environmental impacts in the report. Although Chevron is a large GHG emitter and John Watson, Chevron’s chairman and CEO identifies environmental stewardship (“our means of reducing our impact on our operating environments”) as one of the three areas that is in the heart of Chevron’s work, this issue is barely mentioned in the report and can be found only almost at the end.
There also seems to be a dissonance between statements Chevron makes and the results it reports. Chevron declares in the report that “we are taking significant steps to address greenhouse gases (GHGs)…We made a long-term commitment to improve energy efficiency in our day-to-day activities, which will help us manage our carbon emissions.” Still, the results show very little progress – total GHG emissions decreased by less than 1 percent since 2007 (however there was a 5 percent reduction in Scope 3 emissions compared to 2010). In terms of GHG emissions intensity, the company, which indicates greater efficiency, actually did worse in 2011 with increased GHG emissions intensity per 1,000 barrels both upstream and downstream the value chain.
If Chevron wants to make the most out of its CSR reports, it needs to be more transparent and provide information in a way that stakeholders can trust. Then, it will be actually easier for the company to gain support for the progress it makes. We’ll have to wait for next year to see if Chevron listens to our advice, or continues to just paint a rosy picture of its operations.
Raz Godelnik is the co-founder of Eco-Libris, a green company working to green up the book industry in the digital age. He is an adjunct faculty at the University of Delaware’s Department of Business Administration, CUNY and the New School, teaching courses in green business and new product development.